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FRAUD ALERT: Beware of Pyramid Schemes

What is a pyramid scheme?

Pyramid schemes are illegal scams in which large numbers of people at the bottom of the pyramid pay money to a few people at the top. Each new participant pays for the chance to advance to the top and profit from payments of others who might join later.

Of course, the pyramid may collapse long before you reach the top. In order for everyone in a pyramid scheme to profit, there would have to be a never-ending supply of new participants. In reality, however, the supply of participants is limited, and each new level of participants has less chance of recruiting others and a greater chance of losing money.

What you should know about pyramid schemes

They are losers. Pyramiding is based on simple mathematics: many losers pay a few winners.

They are fraudulent. Participants in a pyramid scheme are, consciously or unconsciously, deceiving those they recruit. Few would pay to join if the diminishing odds were explained to them.

They are illegal. There is a real risk that a pyramid operation will be closed down by law enforcement officials and the participants subject to fines and possible arrest.

Posted on December 29, 2004 at 01:00 PM | Permalink


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They really are scams, I remember when a friend offers me Amway, I just knew that theres was something fishy about that. Great post

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